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A complex subject

But for papers like the Beacon, a trade dispute with Canada — which has led to U.S. tariffs that have caused multiple and continuing increases in the price of newsprint since last fall — could be a life-and-death matter.

So I have chosen to write about this, complex though the subject is, because seemingly distant issues like tariffs are having a serious impact right now on newspapers throughout the country, and therefore affect our readers and advertisers as well.

Not surprisingly, the tariffs have been widely blamed on President Trump. Though it’s true the Trump administration has imposed tariffs on a number of Chinese, European, Mexican and Canadian goods, this particular problem cannot be laid at the president’s doorstep.

Rather, the cause is an anti-dumping case brought by the North Pacific Paper Company (NORPAC) against Canada before the U.S. International Trade Commission (ITC) last August. (The ITC is an independent, bipartisan federal agency. Four of its five current commissioners were appointed by President Obama.)

NORPAC, which supplies half the U.S. market for newsprint, blames Canadian government subsidies for driving down the price of imported newsprint in the U.S., thereby hurting its business and its employees.

After an investigation, the ITC identified 34 separate subsidies by Canada of its paper mill industry. This led to temporary tariffs being imposed on Canadian newsprint in March, with a final determination and permanent tariffs to be announced next month.

In response, U.S. newspapers and much of the rest of the publishing industry have banded together to fight the tariffs, arguing that the sharp price increases they are creating threaten to put many smaller papers out of business.

Printing constitutes the second largest cost of producing a newspaper, after labor. The cost for newsprint has already risen more than 25%, and additional increases are on the horizon. This has led to a reduction in frequency, circulation and/or page count, as well as staffing, by newspapers across the country, including the Beacon.

These actions, of course, reduce the demand for newsprint which, in turn, could lead to reduced business for the remaining paper mills in the U.S., causing them and newspaper printers to cut their staff and operations in a downward spiral of dire consequences.

Furthermore, these price increases are coming at the worst possible time for newspapers, which are struggling against growing competition from online publications that don’t bear printing costs. In the face of this competition, print publishers cannot raise their advertising and subscription rates sufficiently to offset the price increases.

A bill has been introduced in the Senate (known as the PRINT Act, S. 2835), to require the Commerce Department to pause the tariffs and evaluate their impact on the publishing industry. As a business owner and publisher, I would like to see that law pass.

But NORPAC argues against this, saying U.S. trade laws don’t permit the consideration of such side effects in the case of clear dumping from abroad. And I have to admit, there do seem to be two sides to this debate.

Canada has clearly taken steps to reduce the price of its newsprint. This has driven down the price of newsprint in the U.S. for years, benefitting papers like ours with what now seem to be below market paper costs.

At the same time, the unfair competition has driven a number of U.S. paper mills out of business or led them to close down unprofitable mills, which reduces supply and thus contributes to the rising prices sparked by tariffs.

So NORPAC has a case, but its efforts to level the playing field all at once is putting tremendous strain on the newspapers that remain in business, and on the many related businesses that service publishers and their readers (including, ultimately, NORPAC itself).

So you see, as I said, it’s complex. There are so many moving parts in our economy, and in both domestic and international trade, that it’s hard to know who’s right and who’s wrong when there’s a trade dispute.

But it’s not hard to see who loses when there’s an attempt to solve things by imposing a tariff. In the long run, just about everybody.

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